Mega Negotiations Story

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Here is a story about a strategy we used which I called mega-negotiations. We were very lucky that all the elements fell in place and we had hungry suppliers. The size of the negotiations gave us strong leverage.
These were the ground rules we established for a $5 billion dollar bid of supplier work for major expansion of chemical plants.

1.   There would be only one round of bids. We urged the suppliers to give the bid their best shot. We didn’t have the time to manage multiple bids.

2.   We announced that we would, in many cases, narrow down the areas where we had two preferred suppliers to one, unless we had a good business reason for keeping two.

3.   Although we had negotiated some significant total-cost-of-ownership savings in the current contracts, we were open to enhancements from the suppliers and distributors.

4.   We told the suppliers that we would not accept their standard spare parts packages as we had in the past. We would challenge their typical spares packages, but would be especially open to creative ways of them controlling and managing the spares at minimal or no cost to us.

5.   OEMs (Original Equipment Manufacturers) could work with distributors to propose any addi­tional creative services to provide us.

Believe it or not we saved over $1 billion with this approach. We were stunned.

       Dr. Tom DePaoli  www.apollosolutions.us